Continuing trend may cost city $12m: councillor

The value of building permits issued by the City of Vancouver last month was less than half that of the January prior, and that represents an ongoing trend that could cost the city $12 million in yearly revenue, according to Coun. Raymond Louie.

A monthly update from city building official William Johnston, issued earlier this month, shows that in January of this year there was construction permit revenue from 34 new units in the city, compared to 78 in January 2008.

“The value of building permits issued in January 2009 was approximately 29 per cent lower than the previous month and 54 per cent lower than the value for January 2008,” reads a statement fromJohnstonaccompanying the statistics.

Coun.Geoff Meggs called the news “grim,” pointing out that January was the second consecutive month with significant building permit declines. “It’s really slumped. And the slump continues,” he said.

Louie said the city typically makes about $24 million from building permit fees every year, but is anticipating a “significant drop” in that revenue. “If that holds for the entire year, and it’s a 54-per-cent drop in comparison to 2008, then that represents about a $12-million drop in permit fee revenue to the city,” he said.

Louie said he hopes the losses won’t mean higher property taxes, but can instead be covered by cost-saving measures being considered by city manager Penny Ballem. Those include a review of current city expenditures and hiring and pay freezes.

The problem is not isolated toVancouver. Other municipalities around the region have been bracing for the prospect of builders scaling back their activities and paying fewer fees for development and building permits.

The City of Surrey has budgeted to receive $13.5 million in fees this year from its building department, down substantially from the estimated $16 million it took in last year, Vivienne Wilke, the city’s general manager of finance and technology, said in an interview.

However, Jean Lamontagne,Surrey‘s general manager of planning, said permit activity in January was only about one quarter of the level experienced in January 2008. In February, Lamontagne said activity to date has been about 40 per cent of the level it saw in the same month a year ago. “For us, we could see some trends start last year,” Lamontagne said. “We anticipate industrial, commercial and institutional [permit] activity to be about the same as last year, but residential will be down, we’re targeting about half the value of last year.”

Richmondalso prepared for a drop of about $900,000 in revenue from its building department, city spokesman Ted Townsend said, budgeting for about $2.8 million in revenue from about $3.6 million a year ago. “So we’ve adopted a fairly frugal budget, really tightening spending in order to minimize the overall impact on people,” Townsend said, adding he did not readily have a figure on building activity in the municipality.

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